Good morning and welcome to the Ionis Pharmaceuticals Fourth Quarter and Full Year 2020 Financial Results Conference Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Wade Walke, Vice President-Investor relations, to lead off the call. Please begin.

Thank you, Tom. Before we begin, I encourage everyone to go to the Investors section of the Ionis website to find the press release and related financial tables, including the reconciliation of GAAP to non-GAAP financial measures that we will discuss today. We believe non-GAAP financial results better represent the economics of our business and how we manage our business. We have also posted slides on our website that accompany our discussion today. With me on today’s call are Brett Monia, our Chief Executive Officer; Beth Hougen, Chief Financial Officer; and Richard Geary, Executive Vice President of Development. And joining us for Q&A are Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research. I would like to draw your attention to slide 3, which contains our forward-looking language statement. We will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. And with that, I’ll turn the call over to Brett.

Thanks, Wade. Good morning and thank you for joining us on today's call. Last year marked a new beginning for Ionis. With new leadership in place, we laid out a bold new vision for the business and took important steps towards realizing our goal having 12 or more medicines on the market in 2026. Key to our new vision is our strategy to maximize the value of each medicine in our wholly-owned portfolio. Today, our focus is primarily on commercializing our rare neurological and cardio metabolic disease medicines. But those opportunities outside these core areas, we will set a course forward that maximizes the value of each medicine which may include Ionis’ commercialization or partnering. Last year, we accelerated our commercial strategy by acquiring Akcea. This transaction also enabled us to strengthen our organization and to recognize the full value from Akcea’s rich product portfolio. Further, our distribution agreement with Sobi made it possible for us to restructure our European operations which further streamlined our business. We were able to unlock substantial resources through these transactions which we are investing in the business in the following three key areas; first, we're advancing and expanding our wholly-owned pipeline. Second, we're building our commercial capabilities in support of our rich pipeline as we prepare to launch prioritized medicines from the Ionis’ wholly-owned pipeline. And third, we're broadening the reach of our technology through investments in medicinal chemistry, human genomics, validation of new routes of delivery and through other means. We believe investing in these three key areas provides the greatest potential to drive future growth and to achieve our goals of 12 or more medicines on the market in 2026. Last year, we made substantial progress towards achieving this goal, with numerous significant advances across our rich late and mid stage pipeline.…

Thank you, Brett. I'm pleased to say that we exceeded our 2020 guidance with revenues in excess of $700 million and net income of $111 million on a non-GAAP basis. We achieved these results while continuing to invest heavily in our rich pipeline, with a focus on our wholly-owned medicine. And we're particularly pleased with these results, given the challenging global pandemic environment. In the fourth quarter of 2020, w1e took important steps toward our goal of creating a stronger, more efficient company when we acquired Akcea and moved our European operations to a distribution model. Together, these transactions unlocked substantial cost savings that we plan to reinvest to drive future revenue growth. I'll talk more about that in a few minutes. But first, I'll walk through our 2020 financial highlights, beginning with revenue. Last year, about 50% of our total revenue came from our marketed products, with the majority coming from SPINRAZA. Most of the remaining 50% of our revenue came from eight different partners as together we advanced more than 20 programs. Our ability to generate revenue from numerous diverse sources is a key element of our financial strength. SPINRAZA continued its blockbuster performance last year, generating over $2 billion in global sales. We earned $286 million in royalty revenue as a result. And virtually, all of that revenue falls to our bottom line as profit. Biogen remains committed to enhancing patient outcomes and reinforcing the proven efficacy and safety profile of SPINRAZA in SMA patients of all ages. The RESPOND study and the DEVOTE study are two examples of this commitment. The RESPOND study, which is now underway, is evaluating SPINRAZA’s potential benefit in SMA patients who have experienced a suboptimal response to gene therapy. And the DEVOTE study, which is evaluating the potential to deliver even…

Thank you, Beth. We made important progress across our portfolio in 2020 including moving many of our wholly-owned programs closer to market. We're pleased with the performance of our Phase 3 assets with several key achievements last year. The Phase 3 studies of tominersen for Huntington's disease and tofersen for SOD1-ALS achieved full enrollment. We initiated Phase 3 studies with two of our rare wholly-owned cardio metabolic disease programs TTR-LRx for patients with TTR cardiomyopathy and APOCIII-LRx for patients with FCS. And importantly, all six of our Phase 3 studies continue to progress well. We also made substantial progress with our mid-stage programs, including reporting positive data from six studies, initiating more than 10 new Phase 2 studies, and expanding the reach of our technology by demonstrating our ability to safely deliver antisense medicines by aerosol to the lung. We are well positioned for a very busy year of catalysts. The first significant of which is the Phase 3 data for the VALOR study of tofersen in patients with SOD1-ALS. ALS is a disease particularly of importance for us because antisense technology is ideally suited to address the root causes of ALS. We have leveraged our platform to develop medicines to treat all forms of this disease. Today with four medicines in development, we believe we could truly have ÁLS around. Tofersen has the potential to become the first disease-modifying treatment for ALS, which we believe will fundamentally change the ALS treatment landscape. Positive tofersen data would also give us greater confidence for our programs for the treatment of other forms of ALS. We believe tofersen may also have the potential to slow progression or even delay the onset of disease in presymptomatic SOD1-ALS patients, similar to the profound effects demonstrated by presymptomatic SMA patient treated with SPINRAZA before symptom…

Thanks, Richard. This is an exciting time for Ionis as we expect to accelerate our next stage of growth and deliver a growing number of new transformational medicines to patients in need. We have the potential to bring three new medicines to market by 2023 and looking further ahead, we're well on our way to achieving our goal of 12 or more medicines on the market in 2026 over half from our wholly-owned pipeline. In support of our new vision to commercialize our wholly-owned medicine, we're making significant investments to aggressively advance these programs forward and also as part of our strategy as the wholly-owned pipeline develops, we're setting our plans to determine the best path forward for each asset to maximize value to patients and to shareholders. And from across our entire pipeline, we look forward to a continuous flow of Phase 3 data readouts for many years to come. In addition to investing in our wholly-owned pipeline, we're investing in building our commercial capabilities and implementing our plans to commercialize our own medicines, advancing our technology and potentially expanding it with new technologies that complement our antisense platform. We believe these investments will provide substantial returns including double-digit revenue growth and this growth will be driven our successful Phase 3 programs into the market, generating more value from the wholly-owned programs we commercialize and from those programs partnered today and those we retain longer before we partner in the future. Before we close this portion of the call, I want to take a moment to recognize Rare Disease Day, which has been celebrated around the world this week. For many years, Ionis has dedicated and continues to dedicate substantial resources to serve patients suffering from rare diseases such as SMA and ALS. We're proud to say that in the case of SMA, we at Ionis pioneered a new market and brought the first disease modifying medicine to these patients, many of whom are with us today because of SPINRAZA. And in the case of ALS, in just a few short months, we again have the potential to deliver the first disease modifying medicine to treat ALS. We’re proud of these achievements but we're only at the beginning. Of course, Rare Disease Day is about the patients and families living with rare diseases. We have strong partnerships with these great people and we’re confident that we will continue to provide transformational medicines for more patients for many years to come. With that in mind, please join me in recognizing celebrating dedication and accomplishments of the brave patients suffering from devastating rare diseases, as well as the families who care for them. And with that, I'll open the call for questions.

We will now begin the question and answer session. [Operating Instructions] And the first question comes from Yaron Werber with Cowen. Please go ahead.

Great. Thanks so much for taking my question. And really nice progress. Two questions, Beth, maybe just for your housekeeping, and then a question more about the pipeline. Just in terms of top line, your guidance for more than $600 million in revenues, can you give us a little bit of a sense how are you looking at SPINRAZA? You kind of expecting it to be kind of flattish in the growing segment or are you expecting a little growth and no collaborative revenues you mentioned are going to ramp forward in the second half? But anything you can guide us there. And then, a quick question on the ENAC-2.5 technology, I mean it sounds like we're going to get data shortly. The study, it fully goes to Phase 2a. And you're noting that you started Phase 2b now which is in CF this year. Can you just remind us, are we mostly going to be looking at expression in the CF patients or are we going to be able to also look at some kind of a pulmonary function like SEC1 or is the study just too small, the Phase 2a? Thank you.

Sure, Yaron. Good morning. So thinking about our top line guidance for this year, when you think about the commercial revenue stream, really the only impact to commercial revenue is that the transition for TEGSEDI and WAYLIVRA from a product sales top line in Europe to royalty revenue in Europe. We continue to think that SPINRAZA has a very bright future, as I mentioned. We see the opportunity to continue to expand the numbers of patients on treatment primarily outside of the United States. But I think the strong efficacy of SPINRAZA that's been well established in more than 11,000 patients for seven-plus years for many of those patients. It really bodes well for SPINRAZA’s future. And so, we're not anticipating a negative impact at all in the top line with regard to SPINRAZA. And then on R&D revenues, as we always do, we [indiscernible] the many, many milestone opportunities we have over the course of the year. And by doing that, we know that we have lots of opportunity to overachieve on our top line as the year progresses, and we achieved those milestone events and the payments that go with them. So, starting here in February, we like to make sure that we have guidance that we can achieve. But consistently in the past, we have outperformed that guidance and we certainly have those opportunities this year as well.

Thanks, Beth. And to address -- I'm sorry, was there a follow-up?

I was just going to ask Beth, just remind us, if you don’t with Sobi the royalty and milestone agreements and what you have disclosed. That will make sure everybody gets this correct in the models. Thank you.

Yes. Sure. We haven't disclosed the actual royalty percentage. But think about it in the general range of royalties associated with a drug that we share in many of the post-marketing activities. So, we’re continue to supply drug and handle this distribution. We continue to manage safety. We continue to be actively involved with KOLs in this setting, the global strategy and working very closely with Sobi. So, think about it really as a relationship in which we share in the opportunities for top line growth.

And then to address your question, Yaron, on ENAC. So, as a reminder, last year, we demonstrated and presented data demonstrating robust productions of ENAC levels in the lung of normal volunteers following aerosol weekly delivery with excellent safety and tolerability. This year at the ATS meeting in May, we plan to present our first data in patients with cystic fibrosis, and -- in our Phase 2 study which is complete now. And we'll share the results from that study. In that study indeed and because this is our first experience in patients, safety and tolerability will be very important to demonstrate. And we're looking forward to sharing those results. In addition, as you said, it's a small study. It's also a short study. I think it's three months or so in duration. But we will -- we will be presenting data on lung function. And we're very much looking forward to sharing -- to presenting that data at ATS this year. So stay tuned for that. And then, in addition, just as a reminder, ENAC is the first of several drugs moving into development for pulmonary diseases with delivered by aerosol. We have -- we're starting -- planning to start another clinical trial this year to coincide with the ENAC studies and also the ENAC, we also have a Phase 2 study for ENAC in COPD that's ongoing. And then for ENAC and COPD that’s ongoing, and then more coming behind the new clinical start this year. So, the firm is looking forward to building this franchise out for pulmonary diseases.

The next question comes from Paul Matteis with Stifel. Please go ahead.

Hey. This is Alex on for Paul. Thanks for taking the question. I was just curious about this new HFrEF program for the AGT product and what the rationale is for that mechanism of action and whether development there is pending anything in hypertension or if you plan to go in that direction regardless of how the hypertension program goes? Thanks.

Richard, would you like to take that?

Sure. Happy to. So, as you know, RAS inhibitors have been used in heart failure. And our preclinical work certainly points to a robust effect by targeting angiotensinogen in heart failure models. In addition to that, the idea here is certainly not a new one but the design of this study in HFrEF patients allows us in a population where a lot is known about heart failure and the effects of RAS inhibitors as well as safety in that regard will allow us to do a strong proof-of-concept study. It’s powered to get us a bit more information not only on biomarkers but also on functional output. So, we're excited about getting our first look in heart failure in humans with reduced -- with the reduced effect.

Yes. And as reminder, Alex, again, we’re planning to present a much more detailed data, full data set from our Phase 2 study in patients with refractory hypertension, ACC.

Great. Thank you.

The next question comes from Jim Birchenough with Wells Fargo. Please go ahead.

Hey, guys. Congrats on all the progress. Terrific stuff. Maybe on the financials and a pipeline question. On the financials, it’s just that SPINRAZA royalty outlook contemplate some COVID recovery and less spacing out of intrathecal injections, just interesting how you're thinking about that? And then remind us, if you're at the point with PTC where you've reached the sales threshold where you're participating in some of the upside from Latin America for TEGSEDI and WAYLIVRA?

Sure. Hi, Jim. So with SPINRAZA, I think we and Biogen certainly anticipate that the COVID environment is going to ease over the course of this year. And as Biogen noted in their year-end earnings call a few weeks ago, they're already seeing patients move back to SPINRAZA from a competitive products, primarily because they're seeing the need for the efficacy that SPINRAZA of works. And so, the fact that that's already started in the fourth quarter and we anticipate that to continue throughout this year and to be aided by the fact that the pandemic is starting to ease certainly in the US and around the world as well. For PTC, we were -- we hit that point where we started the clock on the 12-month. And so, we would anticipate that we may be able to see some contribution from PTC sales in Latin America this year but it will be late this year.

Great. That's helpful. And then maybe on the pipeline and for Richard, just on FUS-ALS, could you speak about the strength of supportive data whether it's just the biologic rationale or any preclinical data and how that compares to the strength of support for SOD1-ALS? Just trying to get a sense of how validating one may be for the other. And then second part is just on your chart of catalysts or milestones, Huntington's update in terms of natural history study and open label extension is listed sometime in 2021. And so, just maybe to give us a sense of what you would expect to see in contrasting those two groups. Thanks.

Yeah. I'll give a high level and then I'll pass it over to my colleague, Eric, to question a little bit. FUS-ALS, of course, is a monogenic form and hereditary form of ALS. And because there is a known causative genetic component here that we can directly target, we believe that the FUS-ALS compound, which we've shown is a very good drug for lowering FUS to FUS genetic component, bodes well for us and allows us in fact with our conversations with regulatory to move directly into a study that is registrational. And I’ll pass it over to Eric for any other comments.

Right. Yeah. Thanks, Richard. That’s mostly right, the process of the known genetic cause of ALS much like SOD1-ALS. It's known to be a pathogenic protein which accumulates and aggregates in cells. And so, it's similar to tofersen and that we're reducing a genetic cause and reducing a pathogenic protein. And we do have preclinical data that supports that reducing and can provide a benefit. So, I do think it's similar to the tofersen program in that regard. And then I think you asked about Huntington and what Roche is planning to present. And I can just really refer you to their statements where they are continuing to plan to present some data from the open label study, a natural history study, at some point in 2021. And then beyond that, we're really focused on the Phase 3 study, which is progressing and scheduled for its readout in 2022, which I think is the key definitive experiment for Huntington's disease.

Thanks for taking the questions, guys.

The next question comes from Tyler Van Buren with Piper Sandler. Please go ahead.

Hey, guys. Good morning. Just a couple questions. On the financial side, you guys have been profitable over the last few years. So, I guess based on the guidance, this would be the first year you guys would be turning in that loss. And obviously, that's justified by having -- pushing the wholly-owned programs moving forward. But should we expect kind of a modest net loss like this for the foreseeable future in the next several years, or should -- will it continue to grow? And then the second question on the pipeline is just related to the Phase 2 programs. We have a decent amount of clarity on the Phase 3 program, when we’ll get those readouts when they could reach the market, but I get to look across the two or the four Phase 2 readouts over the course of the first half. Which one of those do you think could make it to market first or which one or two, and when might that be?

So, thanks for the questions, Tyler, and good morning. We are -- we have -- its, we're in an enviable position with a very strong balance sheet at Ionis to invest in all aspects of the pipeline. And our commercial strategy and our technology to really maximize the value of -- for Ionis, to grow Ionis for the benefit of patients, shareholders, and alike. And that's exactly what we're doing now as you know. And we're going to continue to do that to maximize our upside in all possible ways. We're not really projecting right now what -- next year or the year after we’ll look like, but we will continue to invest over the next few years. Of course, we also have the benefit of multiple sources of revenue as Beth will -- said in her presentation as well as she reminds us up all the time through R&D revenue, partnerships, as well as our commercial revenue. And we expect our next commercial product to be tofersen and TTR-like polyneuropathy and Huntington potentially those three medicines reaching market in 2023. So, you can see how the commercial revenue as well as the R&D revenue really offset our -- those investments in the future. Too early to project on profitability for 2022. But certainly, we’re going to be continuing to invest. Beth, would you like to add anything to that?

No, I think that was -- I think that was extremely well said, Brett. Maybe the only thing I will add is that we have a long history of financial discipline, and we will continue to exercise that discipline while investing deeply in our wholly-owned pipeline in our technology and really ensuring that our medicines are prepared and ready to successfully launch when they get to market.

And as far as your, Tyler, your question on Phase 2 readouts which we have a lot coming, in the first half of this year, we have three wholly-owned rare disease programs, hereditary angioedema, acromegaly, as well as ENAC, the cystic fibrosis program. I think based on what we see as the next step for those programs, and the size of the next studies that would require them -- that would allow them to be registered and approved, I would have to say that the acromegaly program, with you Richard, is the furthest along that pending positive data from the study that going to read out this year --this first half of this year. It’s probably positioned well for -- to move to a pivotal study. What would you say, Richard?

Sure. I would say that the -- after the Phase 2b for cystic fibrosis, there would be positioning or Phase 3. But there's work to be done there. And then for PKK-L, you're also in a position of depending on the results of this Phase 2 study. But if positive, that two could move relatively quickly.

The next question comes from Vincent Chen with Bernstein. Please go ahead.

Congrats on all the progress and thank you very much for taking the question. Maybe just one quick question. I was wondering now that you have a little more experience dosing RNA into the CNS, how should we think about likely dosing regimens for this? I noticed for example that the FUS-ALS program is dose, I guess, after initial loading dose every two months which is kind of I guess the midpoint of the dose that you tried in Huntington’s and somewhat less frequent dosing than the SOD1 program. How do you think about the dosing required to treat CNS diseases?

Eric, you want to go?

Yeah, sure. Hi, Vincent. I mean, we're always looking at extending our dosing regimen and making then consistent with the duration of action of the drug. And so, in earlier programs, we were working out how to dose the CNS and learning how to get the drugs delivered in a way that they could reduce their targets understanding those relationships. And as we learn more and more, we understand how to extend the dosing regimen. So, I would look for continued expansion and extension of our dosing regimens in the clinic. It's a key objective and we think the profile the drug supports it and we're working across all of our clinical programs to try and understand how we can best extend dosing because obviously extended dosing is much more convenient for patients. An example of that would be in the Huntington's program where we work with Roche to get the every four-month dosing into the Phase 3 program that's ongoing and scheduled to read out in 2022. So, we think that's a good benefit and we can transfer that and hopefully extend it across all programs.

Yeah. And if I could just add to that -- if I could just add very quickly, our strategy to enhance durability and reduce dosing frequency is coming in two forms, right? We’re learning how to select molecules more optimally that allows us to have a longer duration effect and also through medicinal chemistry. New chemistries are coming down, down the pipe. And then the last thing I would mention is, as we and Biogen have said, we've demonstrated very durable reductions in TAO. In our study with MAPT in patients with mild Alzheimer's disease, they will be presented this year and I think it's very telling how durable that is, the effects we're seeing with that molecule.

Have you gained any insight into, I guess, using the Huntington’s data where you do now, have some patients who've been treated on every four months dosing and I guess the open-label extension of the initial generation A1c patients. Have you gained incremental or PK/PD insights into sort of what -- I guess feasibility of longer dosing and is there any reason why it's dosed more frequently than I guess what you're doing at Huntington’s? Is that a matter -- for example, are you trying to a matter of knocking down further, just kind of curious what the thinking is there?

Well, for some of the diseases like ALS, they're very aggressive diseases. And so, you want to get enough drug on board quickly to make a difference and reduce the protein quickly because the patients are progressing fairly rapidly. And so, that's been some of the thinking in ALS. Huntington is a much slower progressing disease. And so, you can take some time to get the drug to steady state and get it into -- right in the level of target production that we want. And I really think that some of this is a matter of let’s just say understanding the PK/PD of the drug. And it takes time and some good human clinical experimentation to get that and really understand how our drugs are working in the CNS of humans as opposed to preclinical species. And so, in addition to what Brett said in terms of optimizing the chemistries and understanding how to design the drugs, there’s also just optimizing our dosing regimen and understanding how our existing drugs work. And that’s what we did along with Roche in some of the Huntington experiments that led us to extended interval.

Great. Thank you very much for the discussion and congrats again on the progress.

The next question comes from Joel Beatty with Citi. Please go ahead.

Hi. Congrats on the progress. Could you tell us more about the Phase 2 trial that's ongoing for ENAC in COPD? And maybe the first part of that question is when could we see data from that trial? The second part is, how predictive of -- is your cystic fibrosis clinical data and predicting efficacy for COPD.

Richard?

So, with our Phase 1, Phase 2a experience with the ENAC molecule, we were to look at a broad spectrum of genetic modifications, and that led us to move into COPD, because in addition to the ENAC target genes going down, we saw other important genes. I don't think we've disclosed at this point, but there'll be more information coming out in regard to what else we saw in that early work that led us to move fairly rapidly into a COPD trial. COPD trial, that’s how likely we’re reporting out. I don't know what we've put out publicly probably early next year, as well as the Phase 2b also would be next year, 2020.

And, Joel, that's a study of COPD patients, nearly 200 patients for over three months or so treatment which the primary change would be launch. So really looking at real clinical function outcomes in that COPD study.

Yeah. And then just to add. If you think about ENAC inhibition as a way to rehydrate the lungs, and so there's a strong rationale for using it in COPD just like in cystic fibrosis because you can restore the hydration balance by inhibiting ENAC.

The next question comes from Yale Jen with Laidlaw & Company. Please go ahead.

Good morning and thanks for taking questions and congrats on the progress. My first question is that in terms of R&D revenue anticipation for the 2021. Are you guys not including any possible ownership and that's why you have the current projection or that part of things already sort of included?.

Yale, sorry. Could you repeat your question? I didn't quite hear you.

So the R&D revenue of 2021, are you guys not including any revenues from potential new partners or just -- and that's what the current estimate to be?

Great question. So, I want to reiterate that our top line guidance really reflects the new strategy to hold on to address longer partners. We do partner know later in development and to really advance a broad pipeline of medicines to the market primarily neuro and cardio. So really as we think about our R&D revenue, it’s based off of amortization from prior upfront and milestone as well as a whole host of potential milestone and licensing fees across our current partnered programs in drugs and later stage research program.

Okay. That's very helpful. And maybe just one question for Brett which is that you mentioned that you also contemplate potentially new technology to complement the current technology you have. What’s likely to be an idea technology that may be fitting into the build?

So, thanks, Yale. Think about the technology investments that we're making in two ways or into two buckets if you will. The first are technologies or investments in technology that extend the reach of our current technology, antisense. So. new chemistries, new likely chemistries that open up new tissues like muscle, cardiac tissue, immune cells, cancer cells. We're working on that both with partners as well as heavy investments internally. New routes of delivery is another example of that to expand the scope of our technology like we do at pulmonary and before that, intrathecal, and we're doing more. Genomics is a third where everybody knows genomically linked targets are the best targets from a validation standpoint prior to validating a target with a drug. And we are investing in that. We had lots of hits. We have a lot of the genomic targets that we’re very excited about that are very novel. And these are through partnerships as well as work we’re doing with our functional genomics groups internally. That’s bucket one. Bucket two is what I think you’re really asking out which is new platforms, new complementary technologies outside of datasets. And I really can't provide much detail there except that we are investing in reviewing and conducting proof of concept studies and doing work in various areas to do things, to invest in technologies that can do things maybe more effectively, more efficiently that antisense is -- will have less success in doing. So technologies, for example, that can more effectively up regulate the expression of genes. Of course, we can do that with our technology SPINRAZA, a perfect example of that. But it's less robust to be able to do that. And technologies that do that will help us complement the things we can do to expand our reach for antisense. And that's a little further out, but we're working on it and we're working on it very seriously. So stay tuned.

The next question comes from Luca Issi with RBC. Please go ahead.

Thanks so much for taking my questions. Congrats on all the progress. I have two, one on HAE and one on AGT. So on HAE, I think there was some interesting back and forth on the editorial of the New England Journal of Medicine a couple weeks ago, where especially the debate was around inhibiting liver PKK versus inhibiting plasma kallikrein, which is what [indiscernible] is doing and whether maybe knocking down liver PKKs less preferable than what [indiscernible] is doing. So, wondering if you have any thoughts on that. And maybe bigger picture, if you can offer any color on how should we think about the upcoming Phase 2 data. And then on AGT, I know you have two molecules in development at this point. Wondering if you can comment on how you’re thinking about the relative privatizations of one versus the other given -- and again, one is a running Phase 2 versus the other just enter Phase 1, I think, healthy volunteers. So, any color there would be helpful. Thank you.

Thanks, Luce. Maybe I'll take a stab at the AGT question. Richard can fill in and then take the AGT question, the two molecules. So, by far, the vast majority of kallikrein is derived from the hepatocyte, the liver, whether it's in the plasma or what's -- elsewhere or what's in tissues. We are blocking prekallikrein with our mechanism of action that essentially prevents the production of prekallikrein into the plasma as well as the metabolite of prekallikrein, kallikrein, he active molecule that leads to bradykinin production and hereditary angioedema attack. So, we're doing -- we're actually. We feel that our mechanism, our approach is superior to an approach targeting kallikrein because we prevent the molecule from ever being made. We don't have to mop it up after it's been made. And we think that this is the potentially the superior -- a superior approach to prophylactic treatment of hereditary angioedema. And we're not -- we’re really looking forward to doing the journal that you referred to. It’s very encouraging. And we look forward to presenting that Phase 2 data this first half of this year. Richard, if you want to add to that, please do or jump into AGT. I just want to add to that. This two will jump into AGT.

No. I think you covered that nicely. So, I’ll jump in to AGT for just a minute. We have two molecules, one that is a Phase 2b ready and one that is not yet in the clinic or it’s just started in the clinic, I should say, our Phase 1 study for ION904 has started. And so, we're moving forward with the 2.5 LICA now. The thing to remember is that the 2.5 LICA is a based on all of our preclinical data significantly higher potency molecule. So we think of it in two ways. First, in heart failure, it would be highly -- perhaps beneficial to have a molecule that we can administer very infrequently with a subcu approach. And in addition to that, the 2.5 LICA gives us a potential for oral. So it's really a play on are really moving into a best first and best-in-class for that indication. And so, we're moving that one forward quickly and we'll have data along the way in the Phase 1 trial to be able to read out exactly what that potency looks like in human potency and duration of action. So look for that.

The next question comes from Jessica Fye with JPMorgan. Please go ahead.

Good morning. This is Daniel, for Jessica Fye. Thanks for taking our question. Focusing on the near-term readout in acromegaly, given that growth hormone receptors are found in multiple tissues throughout the body, do you see a risk in targeting a liver-specific glaucoma receptor expression alone with your LICA product? And then when it reads out, what should we expect with the top line data?

So, first of all, yes, we are targeting liver where the majority of the receptor at least systemically lies. And so, the initial is in addition to somatostatin analogs which have already gathered up inhibition of majority of the receptors, and now what we're doing is significantly reducing the activity in the liver. Again, I think I'll wait for the data but the top line data is going to IGF-1 and where we’re looking at also probably not top line but later we'll be able to report out all of the information on quality of life where we're seeing some exciting kind of results. So I think that's what you’re going to be able to see as we move forward and why we think liver targeting is likely to be not only additive but potentially even as a single agent. We’ve started our single agent study now

Yeah. And I’ll just add to that liver is also the primary source of IGF-1 in addition to the growth hormone receptors in other sites which of course drives this disease. And what we're hoping to show is that patients who are poorly controlled on somatostatin analogs. We can get a fair number of those patients. A good number those patients under control to normal IGF and that’s we're hoping to do and we think this mechanism has potential to do that. So we're looking forward to sharing those results.

The next question comes from Mani Foroohar with SVB Leerink. Please go ahead.

Hey. Thanks for taking the question, guys. We'll start with this specific one and then go to more general one. There's a little discussion about the HAE opportunity on this call. Can you dig in more detail on where you see the opportunities that commercially and clinically in terms of frequency administration, depths of attack reduction, where you see that opportunity, and how that would translate into a clinical trial design that can generate a label that could support success in a pretty competitive market? And then, the second question more broadly, the live discussion around all of the therapeutics outside the liver expanding into other areas of therapy. Most of bio compared with competing companies who seem to be unaware of SPINRAZA like your success in CNS. As you think about producing data of effective knockdown in therapy in both -- in long and other indications, how should we think of another target tissues? How should we think about the tempo with which that could translate into an acceleration on the R&D partnership side as you sort of expand out the aperture potential target tissues that you defined in which you could find partnerships?

So thanks, Mani. Great questions. So, I'd like Onaiza, who’s on the call, had a chance to speak up to talk about the opportunity that we see in HAE. As you say, it's a -- there's as you say, it's -- there's drugs out there already that are treating this disease. But we think -- we like the potential of our current models. I'd like Onaiza to maybe speak to this.

So as I think has already been said but I think it's worth reiterating is that we're really looking at a treatment that is designed to prevent attacks rather than simply kind to treat acute episodes on demand, right, and we expect an improved tolerability profile in the existing therapies as well. I think the name of the game over here in this marketplace has really been about zero attacks and as you said, Techzero [ph] done a nice job as they've entered the market with that. What we see as a continued opportunity from an efficacy perspective is the durability of response. We know that initially you can get down to zero attacks but can you actually maintain a zero tax over time. And we really believe that the PKK again, the mechanism and what's already been described on the call will help us achieve that and of course we'll see that as the Phase 2 data comes out. But that is really where the positioning competitively of the product will be and then of course we know that the current treatment from the marketplace have a more viscous, difficult to inject profile as well and we'll certainly beat that profile as well. So that's where we're looking at it.

And so, we're excited. We think the PKK like a molecule has potential to be the best in the class. We approved it, of course, with respect to reduction in attack rates but we shall see. We're certainly getting great reductions in PKK which is the cause of this disease., I mean bradykinin is but PKK is the promoter of bradykinin levels. Regarding other target tissues, Mani, there are a lot of questions in your question. So, let me take a stab at it, and if I don’t get it right, just follow up. But yes, our CNS platform, we just -- we’re going to scratch the surface of new molecules, new drugs for devastating neurodegenerative diseases that are coming into our pipeline. Our pipeline is already very rich, and it's going to get richer with more and more neuro drugs as we continue to validate the platform showing again and again robust reductions in target and CSF as we're doing again this year with tau program, as we've done in the past for Huntington and SOD1 and its product, and more is coming. And as Eric referred to earlier, we’re continuing to optimize delivery to the CNS with less frequent dosing. And we continue to move forward with new molecules to do that. One is a potential new franchise. We're very excited about this. A year ago, we had a long program, and we showed we had evidence of activity, but it wasn't good enough. And we went back to the lab and developed new chemistries, Gen 2.5, which seems to be getting it done. We're getting great target engagement, excellent safety and tolerability. And that’s a new franchise that we're very excited about opening up organs and tissues. And then with respect to outside of new routes to…

Yeah, that's helpful. One of the -- I think what I was thinking about is if you look at consensus estimates looking out forward, they don't contemplate acceleration in your R&D revenue from expansion into a broader -- into a broader universe of out-licensing opportunities for you. I always think about should we think about other opportunities should you prove out delivery in lung, delivery in muscle, serially other -- in other tissue types, should we be thinking -- should we be thinking about this changing the top line sort of CAGR as it were of growth of R&D? Should we think of this as more of a step function as one of your smaller RNAi competitors you’ve discussed with? Just how do you think about the size and the speed with which you guys could capitalize on potential expansion R&D revenue, if you're -- if you're attacking different tissue types? And that was all of my question.

Sure. So, expanding the scope of the platform certainly will drive even more interest by other companies wanting to partner with us, to take advantage of all the great progress we’re making. I mean, you -- we’ve -- there’s so much interest already in what we’re doing today and then, there’s also tremendous interest in working with us to develop these technologies. We're working with AstraZeneca on new chemistries and new routes of delivery. We're working with Biogen on new chemistries to maximize delivery to muscle as well as CNS. And there will certainly be interest as we expand the scope by other companies that will want to take advantage of this in the future. And sure, we'll be doing more partnerships in the future. But as we emphasized in -- earlier on the call today, we're really very selective in the partnerships we do, not just for the R&D revenue that you referred to, although that's nice. It's really to bring strategic value to the company to really expand the scope of our technology and to really strengthen our leadership position in the space. So, I do think that partnerships based on advances we’re making in tech -- in the technology that you referred to are likely in the future. I also think that partnerships for some of the broader indications that we're working on are possible, too, even without those within the existing pipeline. So lots of potential for partnerships down the road, lots of interest and we will be selective and we'll not just do partnerships for the sake of financial return but also for strategic value.

The next question comes from Jason Gerberry with Bank of America. Please go ahead.

Oh, hi. This is [indiscernible] for Jason. Thanks for taking the question. I guess the first one on Huntington’s. Can you outline some of the things you'd be looking at with your natural history cohort and open label data that you’re going to be presenting sometime this year? What can get you comfortable in ability to show improvement of functional endpoints and safety ultimately? Curious how important is it to see your matching natural history cohort is deteriorating over a 50-month observation period. I guess the second question on HAE. Just to confirm. You generate competitive data to compete in the space. Is the thought that you will need to generate longer term follow-up data beyond the typical six months trial to prove better maintenance of a tax reduction benefit? Thank you.

Eric, would you like to take and I’ll take the HAE?

Yeah. So, we touched on this a little bit earlier on the call and again Roche has stated that sometime this year they’re going to discuss some data from the OLE [ph] and natural history studies and let’s see what they present. And beyond that we can't comment, but I do think that the key endpoint and the key big focus on is the ongoing Phase 3 that is scheduled to read out in 2022. Huntington’s is a slowly progressing disease and the study is powered to give the drug the time to lower mutant Huntington’s which we know it does and have a disease benefit and really test the hypothesis that lowering the Huntington will make a decent benefit. So, that to me is the key experiment. And regarding the HAE question, the Phase 2 study, as we said, will read out and will present top line data at least the first half of this year in patients with hereditary angioedema. We’re looking at frequency of attack rates and over -- about a three-month period of time. There's a wealth of data published with existing therapies on attack rates that we will compare to, what we'll look at. And we'll ask ours -- and we'll answer that, ask ourselves whether or not we're competing or competitive or potentially even superior in attacking -- in reducing attack rates. And based on the data, we have to read the data, we'll decide on the next steps. It’s -- we obviously have already had various options in place based on the data outcome. But I would not rule out this program, as Richard referred -- mentioned earlier coming to a pivotal study based on the Phase 2 data that comes out first half of this year. We have to look at the data, and then we have to decide what the best Phase 3 strategy would be.

One other piece of information to add to that, Brett, is that we have moved all eligible patients into an open label extension that allows us to continue to monitor attack rates on the long term. So, we have an open label extension for the Phase 2 program that is ongoing, has already started. Many of these patients have been in the open label extension for many months. And so, that is where we're going to get our long-term data very quickly.

Yeah. And I will just add to the need, I think you said beyond six months. So, if you take a look at the real-world data beyond six months. So, if you take a look at the real world data and how patients are doing currently, you start to see excursions from their therapies as early as three months. And then, more substantial declines between that three to six-month period. So, we don’t think that we would need data well beyond that period to demonstrate it.

The next question comes from Salveen Richter with Goldman Sachs. Please go ahead.

Hi. Thank you so much for taking our question. This is Sonia, on for Salveen. A few quick questions from us. I was wondering, could you give us the status on your Prion disease asset and when you can expect data there? I think there was going to be a trial initiation sometime mid-year. And then also on the muscle LICA, if you could give us some color on what indications you would potentially go into? That would be really helpful. Thank you.

Eric?

So I'll start with muscle LICA, we’re not really prepared to discuss exactly what indication we're going into at this time on the muscle program. But we're very, very excited about what we're doing in terms of being able to target the muscle. And there is lots of opportunities there in there across various spaces of neuromuscular disease. And as for the Prion program, I can't provide too much color on timing. But we are identified several candidate molecules and working as hard as we can to rapidly get the best candidate where we would involve with the patients.

This concludes our question-and-answer session. I would now like to turn the conference back over to Brett Monia for any closing remarks.

Well, thank you everybody for joining us on today’s call, and thank you for all the questions in the Q&A session. Obviously, here at Ionis, we’re very excited about the future, the present and the future of the company. And we'll look forward -- very much looking forward to providing additional updates on the progress -- the great progress making at Ionis throughout the remainder of the year. So, thank you again for joining, and have a great day.

This concludes our conference. Thank you for attending today's presentation. You may now disconnect.